What are STAR bonds? How Kansas’ stadium funding plan differs from Missouri tax vote
Kansas lawmakers passed a bipartisan bill paving the way to funding a possible Chiefs or Royals stadium using STAR bonds, a controversial funding mechanism that only a few states employ.
In a one-day session Tuesday, legislators approved a plan an addition to controversial STAR bonds — with the House approving the 84-38 and the Senate passing with a 27-8 vote.
The move comes two months after Jackson County voters rejected a 40-year, ⅜-cents sales tax, which would have guaranteed the teams stayed in Missouri.
Unlike the Jackson County vote in April, the Kansas plan does not yet include commitments from the teams and would not include a general sales tax.
Both teams said they are open to relocating to Kansas, according to their legal representatives.
The Chiefs praised Kansas lawmakers in a statement.
“We support their efforts to expand the existing program and congratulate them on passing the legislation in special session. We look forward to exploring the options this legislation may provide,” the statement said.
Royals attorney David Frantze said, “This STAR bonds legislation you’re considering offers a very good opportunity for us to explore an option in the state of Kansas.”
Here’s what else you need to know about how the STAR bonds work and what they mean for the KC area.
How is Kansas’ plan for financing stadiums different from the failed Jackson County plan?
The Kansas plan is statewide, so it opens the possibility of a stadium being constructed in any county, while the Jackson County one was county-specific. However, any Chiefs or Royals stadium is expected to be built in the Kansas City metro area — Wyandotte, Johnson or perhaps Leavenworth County.
In Kansas, sales tax collected from purchases at the property or in the surrounding area, alongside lottery and sports betting dollars, would go toward paying off the stadium’s STAR bonds.
When the bonds are paid off, which should take 30 years according to the new bill, all the sales tax from the district would be diverted to the state’s general fund. In Missouri, all purchases in Jackson County for 40 years would have been subject to a ⅜ cent sales tax to fund the stadiums.
In Kansas, elected officials are deciding the funding scheme, while in Jackson County, residents voted on the stadium tax.
What are STAR bonds?
STAR bonds, which stand for Sales Tax and Revenue bonds, are a way for the Kansas government to provide upfront money for attractions. Kansas is one of three states that have this funding system, which were first used in the state more than 25 years ago.
Under the new bill, state lawmakers would issue bonds for up to 70% of the estimated cost of the professional sports project. A Chiefs stadium would cost at least $2.5 billion, and a Royals stadium is estimated to be $1.5 billion or more. Developers would provide the rest of the money.
Once the facility opens, some of the state retail sales tax from the stadium and surrounding business districts would go to paying off the bonds. City or county governments could choose to put a portion of local tax revenue toward the project, though it is not required.
The plan would also put Kansas Lottery and sports betting revenue over $71 million — likely about $10 million a year — toward repaying the bonds.
How have they been used in the past? Why are they controversial?
Kansas has funded both sports venues — Kansas Speedway and Children’s Mercy Park in Kansas City, Kansas — and entertainment districts — Prairiefire in Overland Park — with the bonds.
The STAR bond program has faced scrutiny because some say the projects do not draw out-of-state tourists and are unlikely to make enough tax dollars to repay the bonds.
More than 20 years after the bonds were issued, the Speedway still owes $10.6 million in bonds, over a third of the original amount. Children’s Mercy Park has paid off its $150 million debt. Prairiefire defaulted on the first part of its $65 million in bonds last year.
What happens if the stadium defaults on bonds?
If visitors to the stadiums did not create enough sales tax dollars to make bond payments, legislators would likely be pressured to put more Kansas Lottery money toward the project, The Star reported. This would reduce the amount of lottery dollars available for other government services.
Would using STAR bonds to fund Kansas stadiums cause a tax increase?
Kansas residents would not pay more in taxes if the teams used STAR bonds for their stadium, though they would not benefit from the increased tax dollars from having the stadium in their state until the bonds are paid off. In the future, state lawmakers have the option to raise taxes to make up for money diverted to bond repayment.
Where do Chiefs, Royals go from here?
Since the bill passed both chambers and Gov. Laura Kelly said she does not plan to veto, the Royals and Chiefs have the option to use STAR bond financing and choose a Kansas location for a stadium project. The teams would negotiate with the Kansas secretary of commerce, Lt. Gov. David Toland, with a deadline of July 2025 to reach an agreement, with the possibility of an extension.
Municipal governments where the district is located can choose to participate in the process. Under the new legislation, Kansas voters would not be able to directly vote on a stadium funding proposal in their state — only officials would decide it.
The Star’s Jenna Barakman, Bill Lukitsch, Sarah Ritter and Jonathan Shorman contributed to this report.
Have more questions about the Chiefs and Royals stadium debates? Ask the Service Journalism team at kcq@kcstar.com.
